An Investigation into the Housing Market Economics Describe and analyse the changes of housing in the local area over the last 5 years The housing market is one of the most talked about topics in the news. I assume this is due to the high influential potential it holds to the rest of the economy. In this essay I will focus on the causes in house prices. I will investigate how prices have changed nationally and locally. I interviewed an Inter counties estate agent to help my investigation and get his views on the situation. The price of housing fluctuates enormously. Not only does it vary from region to region, but also it is also very volatile within these regions. There are many causes for these unstable prices. According to a spokes person form the Inner county estate agents says there are many factors, which influence the housing market. He believes one of the main factors, which have been influencing the local housing market in the southeast, is the large amount of people coming to work in Cambridge recently. The supply curve appeared to be vertically vertical in the short run. However, the high demand resulted in predictable high prices. Many building companies have also respond to the increases in demand, however this response will not be immediate. Another reason why we saw the price of houses rise was due to the low interest rates. This means the borrowing of money to buy a house is significantly cheaper, which is therefore retaliated with via the increase in the actual cost of a house. London being so close is another major pull factor for people wanting to live as near as possible to where work is more likely to be found. Commuting times and facilities like trains and motorways play a major role in opening up areas as 'commuter land'. People often put up with long commuting distances in order to escape from city living as a family, or to find more affordable housing at greater distance from where they work. This is why Saffron Walden has become so posh, since people have realised the benefits of life in a town of this size in a manageable distance to London. Hypothesis: If interest rates are going down, will increase demand for housing which will then in turn increase house prices. When one buys a house, one is paying for the actual house price, a mortgage, and the interest rates on the ... ... middle of paper ... ...eople willing to pay the higher amounts. Schooling facilities have also got an influence in the area, which is another pull factor for people moving within the southeast. There are also relatively low borrowing costs for mortgages, which will encourage people to buy and sell their houses. According to 'The Hometrack' Property Company, house prices in England and Wales fell in May for the second month in a row. The percentage change in prices over the last year in each region can be seen in the chart. In conclusion prices for housing are high in the southeast due to a number of factors: * The demand for housing in an area, * The supply of houses, * Reputation for the area, * General interest rates influence the house-shopping behaviour, * Low interest rates enables people to buy better or bigger houses, * Facilities in the area, * Local employment chances. Region Higher prices are less desirable, and this may mean many families do not have the economic ability to live in the area. The demand refers to the quantity of houses that purchasers are willing and able to buy at a certain price. Houses are scarce in relation to demand.
The housing market is very unique as unlike other goods and services, houses have permanence, it is a fixed location good causing the rules of supply and demand to be taken to new extremes. In the case of the Toronto housing market we can view in almost real time the role supply and demand play on he ever increasing house prices, additionally the fundamental economic issue of scarcity is made extremely apparent by the limited size of the city of Toronto.
In the essay “The Mansion: A Subprime Parable,” Michael Lewis unfolds the real face of the American dream. He talks about his own personal experience in his look out for a house and his struggle with the house he rented. Most Americans have bought houses they cannot afford. Banks offered loans, they have lent mortgages that many don't have enough financial resources to pay them back. Agents have falsely guaranteed that real estate prices will be in constant rise, they promised them that there will be no declination in prices.
area, and I felt it would be a good idea to gain the knowledge of the
Because of this movement, places that were once gross and industrial are inviting and lively, changing where many people who spend their free time throughout
The housing crisis in America is a major problem plaguing the United States economy. Before a solution is formulated, one must consider the history of the market and the causes of the problem. And after a solution is formulated, one must present an idea for prevention of the problem for the future. Many people see similarities between the Great Depression in the late 1920s to the late 1930s. The Great Depression was caused by the Stock Market Crash of 1929.
The new millennium brought with it a housing boom which had reached an unsustainable level (Pollock, 2011). Housing prices grew rapidly, and Baker (2010) noted a rise in house prices of over 70% from 1995 to 2006. For example, he noted average home prices in Los Angeles rose more than $400,000 over the period of 1995 to 2006 and approximately $519,000 in San Francisco. Prices around the country increased substantially as well (Baker, 2010). To encourage homeownership, banks promoted creative financing options (i.e. adjustable rate, interest only,...
“The housing market will get worse before it gets better” –James Wilson. The collapse of the United States housing market in in 2008 was one of the most devastating moments for the world economy. The United Sates being arguably the most important and powerful nation in the world really brought everyone down with this event. Canada was very lucky, thanks to good planning and proper preventatives to avoid what happened to the United States. There were many precursor events that occurred that showed a distinct path that led to the collapse of the housing market. People were buying house way out of their range because of low interest rates, the banks seemingly easily giving out massive loans and banks betting against the housing market. There were
‘There is much talk about community in everyday life’ (Popple, 2015, p. 11). Community often gets valued on its spirits as well measured by its population. It can be argued that community is a challenge of
My mother worked in a job in which she had to remain where she was because there were not many openings for her profession around the country. Should I ever find myself in that position where my spouse, or other important members of my family had to move, the ability to be able to move with them and still find a job to bring in income is very important. Medical mission trips have always been of interest, and as a provider with the help of a team, accomplishing at least one trip to a place that is in desperate need of healthcare is a huge goal I hope to accomplish. Being able to provide care for those who cannot afford it is something I hope to do more than once in my
All good things must come to and end. In late 2005, the housing bubble burst, and housing began to decline in price. People who refinanced, particularly those who financed with variable interest rates suddenly found their homes were valued at much less. The housing market became flooded with homes for sale, because the homeowners with variable rates and interest only loans could not continue to make their payments. (Greenspan) The rise in the number of homes for sale caused further lowering of home values.
“One out of every two hundred homes will be foreclosed every month, making 205,000 new families enter into foreclosure,” Mortgage Bankers Association. The housing industry in the United States is undergoing an unfortunate crisis. There are way too many homes being foreclosed, which cause a ripple of problems.
Affordable housing in the United States describes sheltering units with well-adjusted housing costs for those living on an average, median income. The phrase usually implies to applied rental or purchaser housing within the financial means of lower-income ranges specific to the demographics of any given area. However, affordable housing does not include those living in social housing owned by government and non-profit organizations. More specifically, the targeted range for housing affordability sets below 30 percent of a household's annual income, including all applicable taxes, utility costs and home owners insurance rates. If the mean income per household breaches the 30 percent mark, then the agreed status becomes labeled as "unaffordable" by most recognizable financial institutions.
The history behind affordable housing is an issue that has been an evolving problem in American History. After the war, many soldiers were not able to adapt to society especially finding housing. As a result, the Affordable housing act was issued whereby the gov’t placed a price ceiling on housing. Price ceiling is the maximum a price can go. Since the new price which is the price ceiling was below the equilibrium price, the demand for housing greatly increased because consumers were able to afford housing.
Financialization is a complex process that labels global finance as the dominant force that drives all economic and political bearings. In order to understand this concept and the process of how financialization works, this essay will evaluate and assess how the collapse of the housing market led to the fiancial crisis in 2008. According to Economic Geography a contemporary introduction, financialization “is when all sorts of things are transformed into financial instruments for trading among individuals and firms in the international capital markets. Through financialization, fixed properties such as housing are financialized into structured investment vehicles such as mortgages—back securities that can be easily traded among global investors through a variety of financial institutions” (Coe, Kelly, and Yeung, 2013). Trading mortgages, or shares at the global level proved to be a financial disaster for many involved. Ultimately the collateralized debt obligation market collapsed and thus dragged down the entire global financial market.
Following the sudden increase of the dot-com bubble and the possibility of decline threatening the US management started dropping the interest rates to improve the economy. The interest-rate turned as low as 1.5% in June 2003 which was at its least possible point since 1958 (Gerding, 2009). This low interest-rate found its users in the shape of homebuyers and borrowers with the housing market at last expressing some development after period of declining movement. Indeed the rate of a thirty year unchanging mortgage in the year 2003 was the lowest in 40 years and thus the dream of owning a residence in US was becoming an incredibly simple reality for Americans (Ely, 2009). With increasing housing charges borrowers assumed th...